Blockchain analytics firm Chainalysis has revealed a significant decline in “crypto inflows to known illicit entities” in the first half of 2023. The study highlighted a sharp decrease in illicit activities such as hacks and scams. The decline in inflows to known illicit addresses was a staggering $2.5 billion or 65% by the end of June, compared to the same period in 2022.
The report indicated that legitimate actors within the crypto space experienced a much milder decrease in inflows, despite the ongoing bear market. This suggests that the decrease in revenue was primarily driven by a decline in illicit activities, rather than a general downturn in the industry.
Chainalysis specifically noted the absence of two major scam operations, VidiLook and Chia Tai Tianqing Pharmaceutical Financial Management. These organizations had previously conducted exit scams, luring investors with promises of high returns before vanishing with their funds. Surprisingly, despite Bitcoin’s impressive 83% rally this year, no new operations have emerged to take their place.
However, the report did highlight an exception to this downward trend in the form of impersonation scams. The amount of individuals fooled by these scams, in which con artists impersonate as officials to get their way, has increased dramatically, by about 50% year over year. As a result, whereas other sorts of frauds have seen a considerable 70% fall in total inflows, those using this strategy have seen an only 23% decline.
The decline in crypto crime revenues is encouraging for the industry, as it indicates a positive trend towards increased security and awareness among participants. The reduced prevalence of hacks and exit scams reflects the growing resilience and maturation of the cryptocurrency ecosystem. However, the rise in impersonation scams serves as a reminder of the importance of vigilance and caution when engaging with digital assets.
As authorities and cybersecurity firms continue to collaborate in the fight against crypto crimes, it is hoped that this downward trend will persist, safeguarding investors and fostering trust in the crypto space. Nonetheless, users are advised to remain cautious and informed, as scammers constantly evolve their tactics to exploit new opportunities that arise in the ever-evolving landscape of digital finance.
